No really. Despite the rush of politicians to recall when they last had a pasty or to be photographed eating one (me? south London, last weekend, Greggs, branch still open, no photo available), the problem is we’ve not had nearly enough media coverage of the pasty tax proposals.

“What?!?! Not enough coverage?!?!”, you might well wonder. But bear with me.

You see, there are huge chunks of the story missing from the coverage. Of course there’s the normal thing with a government consultation on a range of proposals being reported as if they are all absolutely certain to come into force.

But more than that, there are many other ramifications to the proposed VAT changes which would catch pasties that have barely been mentioned.

Consider toasted sandwiches and hot chicken products. Sell them from a corner take-away shop and you pay VAT. Sell almost identical products from a huge out of town supermarket and you don’t pay VAT. Should the VAT system really be preferring one over the other? It is debatable, to put it mildly.

It’s also fair to say that there is rather more to the issue that my simple comparison illustrates. But that makes my point all the more: there’s far more to the VAT proposals than pasties and there’s far more to the implications than the future of pasties makers and sellers.

8 Comments

Surely, Mark, your comment about the difference being between small high street outlets and large supermarkets is just sensationalist soundbiting? Isn’t the difference between ‘bakeries” or bakery style shops, where they bring pies (and, of course, loaves, bread rolls etc) in hot, and the lucky people can buy them like that, and a takeaway shop etc, whose business relies on mostly hot food? As I understand it, the budget proposal doesn’t hit pasties or pies sold, as with my local (Cornish headquartered) bakery, from a hot cupboard, which attracts VAT in the same way as any other hot takeaway. Of course a big supermarket with its own bakery can do exactly the same thing, but that isn’t the point, is it? It isn’t even that this is a new practice to exploit a perceived loophole, bakers have always, in my memory, done this, although my memory of how, say Purchase Tax in the 60s dealt with these issues ismore than hazy!!

Let me say, the media coverage of all this has been completely stupid – why not focus on the nonsensicality of the proposal with bread or pasties being sold in different ways with different rates of VAT, not on the ludicrous and inappropriate attempt to use class stereotyping on this. The proposal, of course, is barmy, and spending money on a “consultation exercise” an utter waste when public spending is under such pressure.

Tim13: Yup, my example is deliberately sensationalist – to make the point about how lopsided the media’s choice of sensationalist headlines are by picking only one aspect of the story and reporting it as if it is the only angle.

VAT has made this distinction between hot food and cold food for catering purposes since the beginning of time. The whole point is that food is supposed to be exempt from the tax as it is an “essential”. Within that there are classes of food and drink deemed not to be essential, including alcoholic beverages, chocolate biscuits and food which is catering. The argument follows that food which is specially prepared on premises in a way to facilitate immediate or near immediate consumption is not “essential”. It’s not essential either to eat in a catering establishment, nor too is it necessary for you to have hot food provided to you as a service for immediate consumption when you could heat it yourself. It’s no longer that you’re just being provided with “goods” but a “service” too, and one which is strictly optional.

If people object to this system as arbitrary, then fine, come up with a better one. VAT openly makes arbitrary distinctions because it would simply be too costly and impractical to specify every single product known to man as VATable or unVATable without turning round and saying all food is subject to VAT, which then penalises the poor.

We also have to be careful about how sweeping our VAT exclusions are. We’re required under EU law to have a properly functioning VAT system in place on goods and services within the permitted % levy range prescribed under the VAT Directive. If we exempt too many things, it’s seen as deliberate protectionism within the single market and we’ll get our knuckles rapped by Luxembourg for that.

I agree with you Mack that the publicity is wrongly skewed. Two local shops near me , a chip shop and a Greggs bakers right opposite. Both sell hot pies. Is it right one is + VAt and one not? Within a few minutes walk from the chippy is a supermarket selling hot cooked chicken – same question. Personally, I don’t care whether the rules are changed to make all hot take-away VATable or VAT free, as long as both are the same. Fairness is what counts.

it may be about ‘essential’ or ‘not essential’, if so then vat should be on vegetables because its not essential to buy them when you can grow your own… what a daft logic!! Surely a better basis for differentiation is whether there is an added value service (it is a VALUE added tax after all), bunging a pie in a microwave is hardly a service, its doing you a favour, (at my local bakery they ask you how you want it, but you pay the same either way). Surely the added value service comes in if you sit down at a table and somebody brings it or clears up after you…

Most people hear or see only the headlines, so they believe a special tax on pasties was brought in, just as they also believe a special extra tax on elderly people was brought in. Labour’s position on this was predictable, but reprehensible, in alliance with the right-wing press they encouraged this misrepresentation. It was reprehensible because this sort of childish coverage prevents the introduction of decent fair taxation, as we know whatever real reason there is for it, the right-wing press will always pick out the losers and make a big thing out of them. Underneath, they are exploiting the “all tax is bad” idea, and if Labour really feels that way, well, I did not know it had converted to Ayn Rand politics. If it has not, it should be VERY careful about encouraging that sort of mentality.

The clarification on VAT on hot takeaway food seems to me to be entirely reasonable – the logic of Labour’s opposition would be to end VAT on all takeaway food. Well, if they did that, what would they tax more or what government spending would they cut?

Ending higher tax allowances given just because you are elderly also seems to be to be entirely reasonable. Why should someone who is old pay less tax on the same amount of income as someone who is young? Newspaper coverage which suggest they are being made to pay extra tax is wrong. If it is felt old people deserve a state subsidy, then that should be paid as higher state pension to ALL people of pensionable age. Higher tax allowances for the old only benefit those who have enough income to come into that tax bracket.

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